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Expected utility without full transitivity

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  • Walter Bossert
  • Kotaro Suzumura

Abstract

We generalize the classical expected-utility criterion by weakening transitivity to Suzumura consistency. In the absence of full transitivity, reflexivity and completeness no longer follow as a consequence of the system of axioms employed and a richer class of rankings of probability distributions results. This class is characterized by means of standard expected-utility axioms in addition to Suzumura consistency. An important feature of some members of our new class is that they allow us to soften the negative impact of so-called paradoxes that involve preference reversals without abandoning the expected-utility framework altogether. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Walter Bossert & Kotaro Suzumura, 2015. "Expected utility without full transitivity," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(4), pages 707-722, December.
    • Handle: RePEc:spr:sochwe:v:45:y:2015:i:4:p:707-722
    DOI: 10.1007/s00355-015-0876-5
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    References listed on IDEAS

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    Keywords

    D81;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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